By Aram Achemyan
To mitigate the consequences of the 2020 economic crisis and solve political problems, the Armenian government increased the public debt, which reached $9.97 billion.
In 2021 alone, it increased by $1.3 billion or 16%, while GDP increased by only 5.7%.
The current government increased the public debt by $3.1 billion or 45.2%. In January-July of this year alone, it increased by $748.36 million or 8.1%.
Within 7 months, the internal debt increased by 219.4 billion drams or 18.4%, while the external debt decreased by 336.7 million dollars or 5.4%. It is important to emphasize that servicing domestic debt is more expensive for the state than external debt.
External debt decreased, while internal debt increased, as a result of which its structure changed. In particular, in July 2022, 58.6% of Armenia’s public debt was external debt, and 41.4% was internal debt.
In December 2021, 66.9% was external debt and 33.1% was internal debt.
Ceteris paribus, an increase in domestic debt has a negative impact on the amount of investment in the country. The amounts provided for servicing the public debt will increase in the coming years, which requires a revision of the financial-credit and fiscal policies.
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